Since the first national lockdown began on 23rd March, the UK retail industry has faced unprecedented change and challenges. With non-essential shops forced to close during lockdown, and the majority of the population confined to their homes, consumers went online to purchase both everyday necessities and luxuries to ease lockdown fatigue. But what impact has this had on UK e-commerce as a whole?
The immediate effect of COVID-19 on UK e-commerce
Before COVID-19, e-commerce was already a well-established threat to bricks and mortar retailers without an online sales channel. And the coronavirus pandemic has only accelerated the rapid growth of UK e-commerce. In the first quarter of 2020, e-commerce made up 20.3% of total retail in the UK. By the second quarter, this share had risen to 31.3%.
Accelerated growth of online christmas shopping
With the high street out of action throughout the first lockdown, an increase in online shopping in the lead up to Christmas was already hinted at by the results of a survey Google conducted in June. Back in the summer, 61% of the UK shoppers surveyed said that the pandemic would affect how they shop for Christmas. More than 70% also said they will buy presents and browse for gift ideas online more than in previous years.
This trend is likely to be exacerbated by the effects of the UK’s second national lockdown, which is set to last until 2nd December. With non-essential shops once again closed, and Black Friday and Cyber Monday falling in the lockdown period, more consumers will be driven to shop online.
In 2019, when bricks and mortar stores were fully operational, 57% of British Christmas purchases were made online. Given the current lockdown, and uncertainty around whether it could potentially be extended, this figure looks set to be surpassed. UK e-commerce retailers can look forward to the potential of a bumper festive trading period, and it seems that Christmas shopping started early this year. Data from research intelligence agency The Smart Cube showed a 6.6% uplift in average daily visitors to retail websites in the week beginning 27th September, compared to the previous two weeks. Anticipation of a second lockdown and potential disruption to deliveries may have contributed to this early increase in festive online shopping.
Disruption to deliveries
The unexpected increase in e-commerce demand sparked by the coronavirus pandemic and first UK lockdown caused disruption to all parts of the supply chain. Suppliers were faced with reduced worker availability, capacity restrictions on workplaces and delays caused by implementing new safety protocols. Similarly, international deliveries were disrupted by growing workloads and fewer personnel at border points.
As many other businesses were forced to halt or reduce their operations, courier and logistics companies faced the challenge of increasing their services to ensure the timely delivery of both commercial goods and necessities. Services like Amazon Prime have shaped consumer expectations by offering fast, in some cases same-day, shipping. As a result, UK e-commerce businesses and the couriers who support them are facing both an increase in demand for products, and an expectation of fast delivery.
With the high street still, for the most part, off-limits to shoppers in the run-up to Christmas, fulfilling home deliveries in a timescale consumers are happy with is one of the main hurdles facing online retailers.
Will this have a long term effect on UK e-commerce?
Research compiled by J.P.Morgan in 2019 projected that the UK e-commerce market would grow by 9% a year over the next three years, with the market predicted to be worth €231.2 billion by 2021. The events of 2020 will undoubtedly have accelerated this projected growth.
More brands moving to e-commerce
Data from Alvarez & Marshal shows that as a result of the coronavirus pandemic, 38% of consumers in the UK purchased something online for the first time which they had previously only bought in-store. The effects of long-term social distancing may also see a reluctance to return to in-store shopping, even when shops reopen. For bricks and mortar retailers without an e-commerce platform, forced to close during periods of national lockdown, this may be the catalyst to start selling online. Many will now recognise the potential of e-commerce as a complementary or alternative sales platform that offers opportunities for growth, even in the time of a pandemic.
The SARS outbreak between 2002 and 2004 was the trigger for the e-commerce success Alibaba and other Chinese brands have enjoyed in Asia. Alibaba launched its online marketplace at a time when many Chinese consumers were quarantining at home. Similarly, one of China’s largest retailers, JD.com, switched its focus to e-commerce during the SARS pandemic. It is likely that a similar trend will be seen in the wake of the coronavirus crisis, not just in UK e-commerce but globally.
A crowded and competitive market
As more brands switch to trading online, or enhance their e-commerce offering, UK consumers have more choice than ever before. When choosing an online retailer, 86% of consumers name convenience as the most important factor, followed by 48% of consumers for whom having a product delivered to their home was the biggest driver of online purchases. In addition to offering competitive prices, UK e-commerce brands need to provide a convenient shopping experience alongside fast and reliable home delivery to stand out in an increasingly crowded marketplace.
Focus on efficient service
In the immediate wake of the first UK coronavirus lockdown, couriers adopted new measures to ensure high standards of health and safety. Contactless deliveries with no need to sign for a parcel have become the norm. Meanwhile many retailers have expanded or created click and collect services, allowing consumers to buy online before collecting their purchases in a safe, socially-distanced manner.
The UK e-commerce landscape has been permanently changed by the COVID-19 pandemic. New consumers have discovered the convenience and ease of shopping online, and many retailers have strengthened their e-commerce offering, or begun trading digitally for the first time. Whether you are an established e-commerce brand, or online retail is a new arena for your business, Asendia can help you offer convenient, reliable and affordable delivery options to every customer.